NEWS RELEASE 12/15/08

FASB Issues Proposed FASB Staff Position FAS 141(R)-a, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies

Norwalk, CT, December 15, 2008—The Financial Accounting Standards Board (FASB) today issued proposed FASB Staff Position (FSP) FAS 141(R)-a, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies. The proposed FSP would amend FASB Statement No. 141 (revised 2007), Business Combinations, related to the accounting for assets and liabilities arising from contingencies in a business combination. Constituents have until January 15, 2009, to review and provide comments on the proposed FSP.

The proposed FSP is intended to improve financial reporting by addressing concerns from preparers, auditors, and members of the legal profession about the application of Statement 141(R) related to the initial and subsequent recognition and measurement, and disclosure of assets and liabilities arising from contingencies in a business combination.

The proposed FSP would require that an asset or a liability arising from a contingency in a business combination be recognized at fair value if fair value can be reasonably determined and would provide guidance on how to make that determination. If the fair value of an asset or liability cannot be reasonably determined, the FSP would require that an asset or liability be recognized at the amount that would be recognized in accordance with FASB Statement No. 5, Accounting for Contingencies, and FASB Interpretation No. 14, Reasonable Estimation of the Amount of a Loss, for liabilities and an amount using similar criteria for assets. The proposed FSP also would amend the subsequent measurement and accounting guidance and the disclosure requirements for assets and liabilities arising from contingencies in a business combination.

“While the FASB believes that fair value is the most relevant measurement attribute for assets acquired and liabilities assumed in a business combination, the Board also acknowledges concerns raised by preparers, auditors, and members of the legal profession,” said FASB member Larry Smith. “The proposed FSP addresses those concerns by requiring the use of fair value to value assets and liabilities arising from contingencies only when fair value is reasonably determinable.”

Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. For more information about the FASB, visit our website at www.fasb.org.